Saturday, May 14, 2011

LANSING -- "A day after the Legislature delivered most of Gov. Rick Snyder's business and personal income tax overhaul, state government got the best news it's had in a decade: Tax collections are exceeding expectations again, with analysts predicting Friday that the state will take in up to $690 million more next year than had been forecast only four months ago.

Forecasts released Friday by the House and Senate Fiscal Agencies said 2012 tax collections will be between $484 million and $690 million higher than had been contained in official estimates in January. According to the Fiscal Agency forecasts, tax collections also will exceed earlier projections in the current fiscal year by between $426 million and $557 million."

Not really Che, Snyder took a meat axe to K-12 education spending, slashed the earned income credit to low income wage earners, and wants to tax retiree pensions (I thought Republicans didn't like tax increases?) all while giving big business a multi billion dollar tax cut. So he is shifting the tax burden away from the rich and corporations onto the poor and middle class. Supposedly, the businesses will then take the money that they do not have to pay in taxes and create more jobs. This is the part that remains to be seen, will the jobs follow? The Dems just want to restore some of the cuts.

A new study by The Boston Consulting Group (BCG) says it is –and I find the analysis quite convincing.

For starters, BCG points out that the gap between US and Chinese wages is narrowing rapidly. Thanks to the demand for skilled labor in China, Chinese wages are rising at about 17 percent per year, while the value of the yuan continues to increase.

At the same time, flexible work rules and a host of government incentives are making many states—including Mississippi, South Carolina, and Alabama—increasingly competitive as low-cost bases for supplying the US market.

According to BCG, net labor costs for manufacturing in China and the US are likely to converge sometime around 2015.

Factor in the costs, risks and headaches of inventory and shipping, and the advantages of offshoring shrink even more.

The BCG analysis, which is part of an ongoing study of the future of global manufacturing, concludes that:Goods that are labor-intensive and produced in high volumes, such as textiles, apparel, and TVs, will likely continue to be made overseas.Goods that are less labor-intensive and produced in modest volumes, such as household appliances and construction equipment, are most likely to shift to US production.

“Executives who are planning a new factory in China to make exports for sale in the US should take a hard look at the total costs. They’re increasingly likely to get a good wage deal and substantial incentives in the US, so the cost advantage of China might not be large enough to bother—and that’s before taking into account the added expense, time, and complexity of logistics,” Harold L. Sirkin, a BCG senior partner, said.

Even so, BCG stresses that China will remain an important manufacturing location. First, China has a massive domestic market. Second, Western Europe will continue to rely on China’s relatively lower labor costs. And, lastly, other low-cost countries (Vietnam, Thailand, Indonesia) lack the supply chain, infrastructure and labor skills to absorb all the demand for manufacturing that will shift from China.

I’m not discounting China as a manufacturing force, but study results like these make me think that we are likely to see much more of the “Made in America” label over the next few years.

So, companies that were given billions of dollars in bailouts are making profits and paying taxes. Sounds like a great solution, but I think there might be something important varilables missing from this model for properity.

"Snyder took a meat axe to K-12 education spending, slashed the earned income credit to low income wage earners, and wants to tax retiree pensions (I thought Republicans didn't like tax increases?) all while giving big business a multi billion dollar tax cut"...

So what's the problem?

Extorted tax dollars spent on public education is money wasted if the results are anything to go by...

Earned income credit is yet another subsidy to the less productive, its 'wealth redistribution' on a massive scale...

Regarding the alledged tax breaks to 'big business' let me ask you something, who actually employs people and pays them for their work?

Not really Che, Snyder took a meat axe to K-12 education spending, slashed the earned income credit to low income wage earners, and wants to tax retiree pensions (I thought Republicans didn't like tax increases?) Everybody should pay their fair share, poor included.

all while giving big business a multi billion dollar tax cut.... Supposedly, the businesses will then take the money that they do not have to pay in taxes and create more jobs. This is the part that remains to be seen, will the jobs follow?

Did movie-making in MIchigan go up when Jenny gave them tax breaks?

If a business pays less money, they have more money left to invest in their business. Duh. Of course jobs will come.